Protect your partner in case of death by adding life insurance to your credit products
No one is safe from tragedy, so giving your family or significant other financial protection just makes sense.
Regardless of age, most people don’t like to think about death. Most studies show that about 55% of Canadians do not have Will in place. That is a lot!
However, leaving loved ones in need or with financial burdens to manage on top of dealing with grief and sorting out the estate is not a situation anyone would choose. This holds true for all the financial products and commitments you take on over the course of your life. Have you taken precautions to avoid transferring the financial burdens of your mortgage or credit card to your family?
Keep the house
From the moment you land your first real job, you have a new margin of financial flexibility and the freedom to dream about your next big projects: travel, car, house… Then you meet the right person, and after a little while you decide to buy your own home together. Everything is good. But then suddenly, tragedy hits.
By taking life insurance on your mortgage, you ensure that the insured balance of your loan will be repaid in full to your financial institution. Result: your partner or family end up fully owning the house, and will never have to worry about where they will live and whether they need to move.
Even if you have an arrangement where you share the mortgage fifty/fifty, insurance might still cover the whole insured balance, which could be the entirety of the amount remaining. If the scenario was reversed and only the surviving partner was insured though, it would be a whole other ballgame… Which is why it’s important to make sure that all the owners of a shared good have the right insurance coverage.
You should also be aware that most banks that offer life insurance for mortgages offer a fixed premium for the duration of your coverage, which might help you with your budgeting.
Protect your loved ones, cover your debts
If taking out life insurance for your mortgage seems logical given the amount of money in play, doing the same with your credit card should seem just as rational.
Essentially, with this type of insurance attached to your credit card, your balance as of the date of death or your previous statement is generally covered. So at least, though your partner will need to pay funeral costs and any expenses associated with the estate, your credit card purchases won’t be an additional burden.
Most banks also offer life insurance coverage up to $25,000. Premiums are mainly calculated, barring exceptions, based on a fee per $100 of the remaining balance on the date of issue of the monthly account statement. This is added directly to the balance of your card.
Life insurance on your credit card balance doesn’t generally require a medical exam. This generally also applies to the same type of product aimed at people aged 65 and over.
A question of their financial future
In conclusion, as with all the documents and precautions that need to be planned before you die, life insurance on your credit products represents a way of ensuring a better financial future for your loved ones.
Though it may seem like a difficult topic, it’s still important to broach it and take the necessary steps. It’s a way of controlling the financial impact your death might have on those around you.
Edited on 3 January 2018